Enhanced Protection with no protected lump sum?
SA96
Member
Hi everyone,
Does anyone have any experience with EP clients who have no protected lump sum entitlement.
I have a specific scenario.
- Client has EP with no protected PCLS.
- Client crystallised £1.75 million in 09/10, and used up 100% of the LTA. The LTA in 09/10 was £1.75 million and the client received £437,500 in tax-free cash.
- Client now has c£300,000 in SIPP funds uncrystallised.
My assumption was that the client's remaining LSA is £0, as he used up 100% of his LTA in 09/10.
I also calculated that he wouldn't benefit from a transitional certificate as he has received more than £375,000 in tax-free cash.
But I've been told by a SIPP provider that the client has a remaining LSA of £106,275.
Their calculation is based on 100% of the standard LSA being used (£268,275), and because the client has EP of £375,000, his remaining LSA is £106,275.
Are they correct? It's the first time I've come across a client with EP and no protected PCLS.
Comments
I agree with your analysis. Ask them to quote the legislation that shows they are correct.
Thanks Les, I will definitely do that.
They key point is they are treated as having a standard LTA of £1.5m at 5 April 2024 and they have used it all. So used £375k.
Thank you, I will let you know what the SIPP provider says.
Hi, sorry to jump in on this but what was the outcome? I've had the same thing where we calculated a TTFAC would be better for a client with enhanced protection no protected TFC but the provider have said the standard is better based on the following calc:
But I thought the calc is based on £1.5m and can't see why the standard LSDBA is being used? I've looked through guidance and can't see this mentioned anywhere either.
Thanks